Auditing & Assurance Services 6th Edition by Timothy Louwers

Exercise 21

When completing the audit of internal controls for an issuer, the severity of an internal control deficiency depends on:
A) Whether there is a reasonable possibility that the company's controls will fail to prevent or detect a misstatement of an account balance or disclosure.
B) Whether the account has a history of errors.
C) The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.
D) Both a and c are correct.
E) All of the above are correct.